Coatings World - October 2016

Russia

this figure rose to 54,000 tons, but after that it started to decrease.

However, the economic crisis caused the Eurasia Union in 2014 to question efforts of market participants to replace import, since amid strong devaluation of the Russian ruble, coatings from Russian plants became more competitive at the Kazakhstan market and import started growing again.

For instance, in 2015, according to data from the Russian Federal Customs Service, the country managed to increase export of coatings by nearly 22 percent on year-to-year comparison, while Kazakhstan remained the largest foreign sales market with share close to 44 percent out of overall export sales of Russian producers.

According to Kurmanalin, at the current market conjuncture most coating manufacturers in Kazakhstan do not feel any positive changes from the country’s joining to Eurasia Union, since at the moment it is impossible to produce coatings cheaper than in Russia. He noted that several Russian coating companies over recent years opened their offices in Kazakhstan and sell their products without intermediates at very competitive prices.

A similar opinion was expressed by Alexandr Frolkin, executive director of Alina Paint, who also noted that in the first year after joining Eurasia Union, Kazakhstan coating producers managed to compete with Russian importers on equal terms, but after devaluation of the Russian ruble the situation has changed, causing significant difficulties to local market participants.

For instance, data of the Russian Federal Customs Service stated that with increasing export of coatings in natural terms domestic manufacturers reduced it in monetary terms by nearly 36 percent in 2015. Kazakhstan producers in general believe that this could be considered to be dumping.

According to Peshkov, Tikkurila tar-
gets to produce coatings locally and
for this reason on April, 15, 2015, it
opened its first factory in the country,
which will produce waterborne paints
and primers under the brands TEKS and
Leningradskie Kraski in order to meet
consumer demand for high quality prod-
ucts at an affordable price.
In April 2016, the manufacturing
line has been expanded with the launch-
ing of production of waterborne paints
Tikkurila EURO. Peshkov noted that at
the moment Tikkurila is the only com-
pany in Kazakhstan, producing paints in
the premium segment, whilst previously
all ranges of these products had been im-
ported from Russia.
Localization of production capaci-
ties, according to him, is also necessary
for the company to expand distribution
in the economy segment and export
products to other countries of Central
Asia, such as Kyrgyzstan, Tajikistan
and Uzbekistan.
Focus on eco-friendly
coatings
At the same time, all market partici-
pants note changing tastes of consum-
ers, since demand is gradually shifting
to eco-friendly and water-based paints.
According to Kurmanalin, this issue
becomes very important, since demand
for such type of products is growing,
primarily due to the increase of the av-
erage living standards in Kazakhstan.
As the result, prior to 2015 country’s
market has been gradually shifting to
coatings with better quality and high-
er price, but the economic crisis once
again disrupted this trend.